An integrated approach to dynamic plant location and capacity planning

Lim S-K and Kim Y-D ()
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Lim S-K: Korea Advanced Institute of Science and Technology
Kim Y-D: Korea Advanced Institute of Science and Technology

Journal of the Operational Research Society, 1999, vol. 50, issue 12, 1205-1216

Abstract: Abstract We consider a dynamic capacitated plant location problem in which capacities of opened plants are determined by acquisition and/or disposal of multiple types of facilities. We determine the opening schedule of plants, allocations of customers' demands and plans for acquisition and/or disposal of plant capacities that minimise the sum of discounted fixed costs for opening plants, delivery costs of products, and acquisition and operation costs of facilities. The dynamic capacitated plant location problem is formulated as a mixed integer linear program and solved by a heuristic algorithm based on Lagrangian relaxation and a cut and branch algorithm which uses Gomory cuts. Several solution properties of the relaxed problem are found and used to develop efficient solution procedures for the relaxed problem. A subgradient optimisation method is employed to obtain better lower bounds. The heuristic algorithm is tested on randomly generated test problems and results show that the algorithm finds good solutions in a reasonable amount of computation time.

Keywords: plant location; capacity planning; integer programming (search for similar items in EconPapers)
Date: 1999
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DOI: 10.1057/palgrave.jors.2600849

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